Leading provider of technology enabled supply chain solutions for the aerospace engine MRO market

Deal Facts
  • AGIC acquired a majority stake of Farsound in 2019 alongside management

Business Overview

  • Farsound is a leading UK-based aerospace parts distributor focusing on C-class and other fast moving consumable parts to the aerospace aftermarket. Alongside long-term supply agreements Farsound also provides value added services such as kitting and customer consignment
  • Provides up to 20,000 SKUs from over 300 suppliers with over 99.5% on-time-in-full delivery (“OTIF”) compared to typical in-house provision of 50-80% OTIF, a critical advantage in a market where delays to servicing cost MROs a lot of value
  • Farsound operates globally with offices in the UK, North America, UAE, Hong Kong and Singapore with >20% of revenue coming from Asia, which has the world’s largest and fastest growing fleet of commercial aircraft and is a rapidly expanding global hub for MRO activity

Investment Thesis

  • Market leader in the aerospace engine MRO segment with limited direct competition. Principal competitor is MRO customer’s in-house procurement function
  • Aerospace is a long term structurally growing industry with global active fleet forecast to grow at 5% p.a., underpinning future demand for aftermarket parts. Aftermarket is highly economically resilient and not closely linked to airline profitability or aircraft new build
  • Engine C-class parts spend is currently $1 billion, forecasted to grow at 7%. The outsourced segment will outpace the overall market with established the trend towards outsourcing forecast to continue
  • Quality of service promotes long-term contracts with key customers underpinning highly visible revenue and offering significant land and expand growth potential,  as well as strong financial metrics with high margins, low capex and strong cash flow

AGIC Value Added

  • AGIC is actively promoting a closer and more effective relationship between Farsound and all major MRO shops in APAC and has made solid progress towards solving long-standing technical problems holding the companies from placing larger orders
  • AGIC is also looking to enhance Farsound’s geographic footprint with introductions to MROs in Japan, Korea, Singapore, Malaysia, etc.
  • In addition we supported management in maintaining stability of revenue and profitability even during times of extreme pressure dealt by the pandemic to the aviation industry